Are you supposed to be Securities licensed to do this?

[Northeast Agent]

I saw a post on a FB group I belong to and thought I'd pose the scenario here:

Agent#1 Met with a client that receives $655/mo in Social Security and had $22K in a 401-K. He made $2,500 commission at no cost to the client and who now has $990/mo income and has no Medicare deductible and almost no co pays for Medical and Rx. This was done by a SPIA (Single-Premium Immediate Annuity), QMB application, FE policy and and a DSNP plan.

He said the SPIA is income not assets. The 401-k was accessible (not in payout mode) and is counted by Medicaid as an asset. A 401-k payout mode is not sufficient for Medicaid because the principal is still accessable. With a SPIA it is an irrevocable unaccessable income stream. In this state as with most countable assets test is $7700. The SPIA paid out at $200/month. Gross SS was 790 after QMB. He wrote a FE policy to cover burial. Client retained $5k for emergency fund we then did a DSNP MAPD
is there a waiting period after you put it into a spia to be able to apply for the Medicaid?

Agent #2 Are you securities licensed? I hope so! Because you just gave advise to sell a security to fund your plan. If your not securities licensed then your playing with fire.

I know people personally that have been sued for giving securities advice without a license regarding this exact situation. It's on FINRA and SEC radar especially attorneys....be careful

Agent #1 I am not giving advice, I am explaining Medicaid policy. If this line of BS prevails ALL DHS workers will be in violation. Further, I have for years done IRA transfers into SPIAs if it we're a problem carriers suitably would stop this practice

 

[DHK]

Source Of Funds; A Source Of Pain

Is he giving securities advice? Or is he simply showing an alternative solution?

 

[DHK]

And be sure to read the sticky thread:

https://insurance-forums.com/community/threads/new-annuity-suitability.95909/

 

[Allen Trent]

I saw a post on a FB group I belong to and thought I'd pose the scenario here:

Agent#1 Met with a client that receives $655/mo in Social Security and had $22K in a 401-K. He made $2,500 commission at no cost to the client and who now has $990/mo income and has no Medicare deductible and almost no co pays for Medical and Rx. This was done by a SPIA (Single-Premium Immediate Annuity), QMB application, FE policy and and a DSNP plan.

He said the SPIA is income not assets. The 401-k was accessible (not in payout mode) and is counted by Medicaid as an asset. A 401-k payout mode is not sufficient for Medicaid because the principal is still accessable. With a SPIA it is an irrevocable unaccessable income stream. In this state as with most countable assets test is $7700. The SPIA paid out at $200/month. Gross SS was 790 after QMB. He wrote a FE policy to cover burial. Client retained $5k for emergency fund we then did a DSNP MAPD
is there a waiting period after you put it into a spia to be able to apply for the Medicaid?

Agent #2 Are you securities licensed? I hope so! Because you just gave advise to sell a security to fund your plan. If your not securities licensed then your playing with fire.

I know people personally that have been sued for giving securities advice without a license regarding this exact situation. It's on FINRA and SEC radar especially attorneys....be careful

Agent #1 I am not giving advice, I am explaining Medicaid policy. If this line of BS prevails ALL DHS workers will be in violation. Further, I have for years done IRA transfers into SPIAs if it we're a problem carriers suitably would stop this practice

Based on the information, I dont believe a securities license is currently required. However, if the SPIA was not done in a fixed period payout no longer than the Medicaid Life Expectancy tables, the SPIA may not satisfy the Medicaid eligibility rules.. basically, my understanding is that a SPIA cannot choose a period of time or a joint payout option or a period certain if the length of payments could last longer than the Medicaid tables say the persons life expectancy is. So, if the client chose a Life with 15 year certain period & the Medicaid table gives the person only a 11 year life expectancy, the person could fail the Medicaid application & have the asset counted but no longer have the money because it was irrevocably used to purchase the SPIA.

If the SPIA was done as a fixed period for less than the Medicaid life expectancy table & the client outlives the payout, how will they continue to pay the final expense policy premiums

 

[Northeast Agent]

Thanks, guys. This is food for thought...